Crypto crime is rising, investigators need more

As crypto use cases increase, crypto-related crimes are only getting harder and harder to track, per a new report.

Crypto crimes and investigations, as revealed in a new Chainalysis report, are getting complex and resource-intensive compared to normal criminal investigations. This adds to the crucial role of public sector investigative agencies in the fight against crypto crime, emphasizing the urgent need for improved staffing and tech in crypto. 

Over the last decade, crypto has emerged as a focus for law enforcement, regulatory, and military agencies worldwide—and the focus will only get larger. Agencies are tasked with reducing crypto-related risks in the public sector without completely removing its usability. 

The survey found that public sector employees generally positively view crypto. Latin American and Europe, Middle East, and Africa (EMEA) respondents are optimistic about its place in financial markets, while Asia–Pacific (APAC) respondents are more skeptical.

Participants expected a rise in crypto-criminal activity over the next five years. They also predicted that investigations would require more time to track and report. Around half of the participants also expressed dissatisfaction with their agencies’ staffing and technical resources for investigating cryptocurrency-related crimes.

Crypto perceptions

According to the survey, more than 50% of the participants consider crypto a legitimate form of currency, with the EMEA region having the highest consideration at 72.4%.

However, most respondents believe that crypto is mainly utilized by bad actors, such as criminals, especially in the APAC region, where 67.7% share this perspective.

“These illicit use cases extend beyond the forms of cybercrime we typically think of as crypto-native, such as ransomware and darknet markets, and include everything from intellectual property crime to conventional drug trafficking,” the report read.

Despite this perspective, many believe in crypto’s potential for adoption and impact on traditional finance systems, especially in Latin America, due to economic challenges driving financial innovation.

Crypto in investigations

Most survey participants recognized crypto’s importance in their investigations across various sectors. There were notable differences in self-perceived expertise, with respondents from APAC expressing less confidence than those in EMEA. 

“Sub-national tax authorities report the highest instance of cryptocurrency artifacts in their investigations, as one might expect given their mandate, at 45.3%,” the report read. “Military and defense agency respondents report the lowest rate at 19.0%, likely reflecting their primary focus on different types of threats and criminal activities.

The need for more crypto resources

Despite different expertise, respondents agreed that additional resources were vital for public sector agencies and should be given to crypto investigations. Chainalysis’s main argument for this was that crypto-related cases generally take longer to resolve compared to traditional financial and non-financial crimes.

Respondents said they encountered a wide wage of crypto use in fraud, scams, cybercrime, and drug-related offenses and that more resources could help investigate the variety of crimes. The EMEA region reported the highest level of incidence.

“Overall, more than half of all respondents said they were either extremely dissatisfied or somewhat dissatisfied with their agency’s staffing resources available for crypto investigation,” the report read.

U.S. respondents were generally satisfied with training opportunities but less so with staffing and technical resources.

Recommendations

To address these challenges, the survey suggested that agencies increase staffing dedicated to cryptocurrency investigations, develop specialized training programs, invest in technology to aid investigations, and build partnerships with private sector organizations.

Over 800 public sector employees from around the world responded to the survey. APAC respondents accounted for 44.3% of all respondents, North America had 18.1%, and EMEA had 10.4%. About one-quarter of respondents declined to share their location.